“Softer landings may become the new normal.”

Anton Cheremukhinm
Research Economist
Federal Reserve Bank of Dallas
.…from a new Dallas Fed research paper, which finds that employee-poaching by U.S. companies is helping to keep unemployment levels stable.

In a new Dallas Fed research paper, Cheremukhin writes that the central bank may find it easier to avoid a recession, thanks to a key fact: while job vacancies are decreasing in the U.S., unemployment has remained steady.

Digging into “the odd behavior of the Beveridge curve,” Cheremukhin says that companies poaching employees from competitors is a key factor in this trend. He writes that either “the additional profits from stealing an experienced worker have increased or it has become less costly to swipe a worker.”

“The number of firms seeking to fill positions by poaching employees from other firms increased, while the ranks of the unemployed remained relatively stable,” notes Cheremukhin. “This development could ultimately affect how policymakers use their toolkit to manage interest rates and could signal an era of softer economic landings at the conclusion of monetary tightening cycles.”

Cheremukhin adds that while unemployment may tick up as “the decline in job vacancies without a corresponding increase in unemployment may not last,” employers’ increased market dominance and growing “monopsony power” could keep the current trends going.

“Taken together, these developments imply labor market softening in the 2020s will lead to a significant drop in job openings but only a slight increase in unemployment,” Cheremukhin writes. “That is, softer landings may become the new normal.”

You can read the Dallas Fed study and peruse its charts by going here.

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